According to Just Group, a financial services provider that focuses on segments of UK’s retirement income, state pension accounts for 6£ out of 10£ of income received, for those aged 65 and above. Recently, the financial provider had polled over 1000 people aged 65 and above, to identify their sources of income.
The provider found out that three quarters of this age group received half their income or more from state pension. Further, people with the lowest income depended on government’s benefit, which accounted for around 90% of retirement income. It was also found out that women (68%), relied more on state pension compared to men (44%).
State pension was the largest source of income when compared to other sources such as rental income, Drawdown and Annuity. However, for people with annual income above 20,000, Defined Benefit (DB) Schemes made a higher proportion of their income. However, 15% of this demographic (65 and above) retire completely-leave off state pension.
Just Group report also revealed that 2 out of 3 British aged 65 and over, had thought of retiring before their state pension age. Stephen Olweus, a communication director, said state pension age should not be underestimated since it was of great significance to most people’s lives. It was a period where most people take a step back from their jobs. He added that state pensions provide a bedrock in terms of finances for later life, which is why mis sold pensions UK issues are so harmful.
For men, state pension has always been 65 years since 1925. For women, state pension was 60 years. After significant changes, women’s entitlement equalled that of men in November. The state pension for both men and women will gradually increase to 66 years (it started December 6 and will be spread for 2 years until October 2020). The entitlement will change again from 66 to 67 in 2028. According to Lowe, those changes will have a major effect on UK’s labour market. He said that the number of older workers is likely to grow in the next decade.
The findings by Just Group come at a time when state pension of United Kingdom was ranked worst by OECD. OECD revealed that British pensioners receive the lowest percentage of their working salary when compared to other countries. The intergovernmental organisation also revealed that close to 20% of people aged 75 and above in the UK live in poverty compared to 12% among UK’s whole population.
According to OECD findings, women were worst affected by poverty. OECD also revealed that people who had sufficient income during their work life and contributed to private pensions had relatively good incomes. However, those without addition revenue sources had few resources thus high poverty and inequality rate.